Thanks Johny.
OK, We just now submitted a case specific enquiry on the web form saying our application #, and that my wife never received any email from CIC as of today whether reg. acknowledgement or for passport request, and asked them if they have the correct email on file, and provided the correct email again, and asked them to call us in case of any questions.
Hope that settles it. I understand that some people never received AOR2, but I see it strange that she did not receive any email about change in background statuses as well.
Is there anyone else who did not get any email from myCIC once the background status changed to 'in progress'?